Why You Shouldn't Use An LLC For Locums Work
Introduction
Locums docs ask about forming an LLC for two main reasons: liability protection and tax advantages. In fact, an LLC gives you neither, and it makes your life more complicated. An LLC isn't worth it. Just practice as yourself, not "Yourself, LLC."
Disclaimer: We're not attorneys and can't give you legal advice. Consider this general information to inform your own research, and consult an attorney about your personal situation.
Poor Liability Protection
An LLC (Limited Liability Company) is a type of business entity. People form a business entity for liability protection — if something goes wrong, your personal assets aren't at risk. Sounds great in theory, but it doesn't hold up for a locums doc.
Malpractice Is Always Personal
Your main liability is malpractice, and malpractice liability is always personal. No business entity — LLC or otherwise — protects you from it.
No Other Material Liability
As a locums doc, other sources of liability either don't apply to you or can be handled with insurance:
A partner's malpractice (you have no partners)
A disgruntled employee (you have no employees)
Someone slipping on a banana peel in your office (you have no office)
An auto accident on the way to a shift (covered by insurance)
Regarding an auto accident, protect yourself in three ways:
Personal auto coverage of at least $500K per person / $500K per accident for bodily injury
Personal umbrella coverage of at least $1 million per occurrence
Consider adding "business use of personal vehicle" coverage to your personal auto policy for extra protection. It's typically inexpensive — a few hundred dollars a year — and deductible as a business expense
No Tax Advantages
Many people assume forming an LLC helps you save on taxes, since a business entity should make it easier to deduct business expenses. It doesn't. With or without an LLC, you can:
Deduct all unreimbursed business expenses
Set up a solo 401(k) or SEP IRA
Take the self-employed health insurance deduction, qualified business income (QBI) deduction, and home office deduction, if you qualify
More Work
Forming and operating an LLC properly isn't that hard, but it does take work and add complexity to your finances. Why take on that work when an LLC gives you weak liability protection and no tax benefit?
Now you know why you shouldn't use an LLC for locums work. Keep it simple and just practice as yourself.
Ready to put this into practice? If you're an ER physician or high-income professional looking for straightforward, evidence-based financial guidance, we'd love to connect. Schedule a free intro call with Yahara Wealth Management — no pressure, no sales pitch, just a conversation.
This article is for general educational purposes only and does not constitute personalized legal, tax, or investment advice. Consult a qualified attorney or tax professional regarding your specific situation.